President Barack Obama promised change in the 2008 election and voters responded by giving him a decisive victory. In New York, voters also demanded change by giving the Democratic Party the majority in the state Senate for the first time in 43 years. The Senate’s former GOP boss, the silver-haired majority leader Joe Bruno, had resigned a few months before the election, leaving his helicopter rides and pimped-out SUV, and was indicted for corruption in January.

Bruno and the senate’s Republican majority had gutted the state’s rent-regulation laws twice in the previous 12 years, and refused to consider any measures that might have helped tenants. So the Democrats winning a majority — by a slim 32 to 30 margin — removed a roadblock to progressive change. Or did it?

On Valentine’s Day, 200 New York City tenants attended the Black and Puerto Rican/Hispanic Legislative Caucus weekend in Albany to push for vital rent reforms that would restore some housing protections and make the city more affordable. The Assembly passed a package of ten rent-reform bills Feb. 2. Those bills include measures that would limit landlords’ ability to claim occupied apartments for “personal use” and would repeal the “Urstadt Law” of 1971, which bars New York City from enacting any rent regulations stronger than the state’s. The Senate is expected to take up the bills in early April.

The top priority for the tenant movement, however, is repealing “vacancy decontrol.” Enacted in the 1990s, it lets landlords deregulate vacant rent-stabilized apartments if the rent can legally be $2,000 per month or more. (Rent stabilization covers buildings with six or more apartments built before 1974, or buildings where the owner accepted it in exchange for tax breaks.) Once an apartment is deregulated, there are no restrictions on rent increases and the new tenant has little to no housing rights. The bill to repeal vacancy decontrol, S. 2237, has 23 co-sponsors.

“This is about getting tens of thousands of apartments back into the hands of people who want to live in safe, decent and affordable housing,” said the bill’s chief sponsor, Sen. Andrea Stewart-Cousins (DWestchester).

“We have to get to the root cause of why landlords want to get rid of us — vacancy decontrol,” said Cathy Stephens, a Harlem tenant and member of Community Voices Heard. “With the same purpose that we got Obama elected, we need to put our efforts towards ending this law.”

Both sides expect a tough fight. “Real estate interests have poured a ton of money into Albany hoping to prevent exactly this,” says Dan Levitan of the Working Families Party. “It’s a battle for the soul of the Democrats. Whose interests do they represent, landlords or tenants?”

According to the New York Times, a group of “major real-estate developers, lobbyists and limited liability corporations,” anticipating a Democratic shift in the state Senate, gave more than $750,000 for the 2008 election. That is 15 times more than they gave to the Senate Democrats’ central campaign accounts for 2006. Those accounts are now controlled by Deputy Majority Leader Jeff Klein (Bronx-Westchester) and Majority Leader Malcolm Smith (Queens).

Last year, a slew of tenant associations and groups raised money and, more important, supplied people power to staff campaigns for Democratic state Senate candidates. Tenant groups, labor unions, gay-rights organizations and other progressives knocked on voters’ doors and called them from phone banks to help Democrats gain key seats in Long Island and Queens.

Ironically, because the Democratic majority is so slim, the state senators who have most benefited from that activism are four considered among the party’s most conservative: Jeff Klein, Carl Kruger (Brooklyn), Craig Johnson (Nassau County) and Pedro Espada Jr. (Bronx). Espada and Kruger were among the “Gang of Three” that threatened to vote with the Republicans until they were given rewards — in Espada’s case, being named chair of the Senate Housing Committee. Tenant advocates believe that real-estate interests gave the gang the go-ahead and wanted to send a message about rent reform.

All four of these senators have rent-regulated voters in their districts, with 76,500 in Espada’s and 15,600 in Klein’s. Although there are rent-regulated tenants in Johnson’s Nassau County district, vacancy decontrol is generally seen as affecting mainly New York City, especially Manhattan.

When the Republicans controlled the Senate, the landlord lobby, led by the Rent Stabilization Association (RSA) and the Real Estate Board of New York, contributed millions of dollars to the GOP. The GOP-controlled Senate repeatedly blocked pro-tenant legislation passed in the Assembly. According to multiple sources, Senator Malcolm Smith approached the RSA before the election about donating more to the Democratic senatorial cause but was rebuffed. However, the RSA reportedly offered to settle $600,000 of state Senate committee debts from campaigns after the Democrats took control. Senate Democrats and Smith reportedly declined the offer, but Smith has not taken a position on repeal of vacancy decontrol.

Jack Freund of the RSA says he will not discuss the group’s campaign contributions. He argues that with the city financially strapped and dependent on real-estate taxes, now is “absolutely the wrong time” to impose regulations that would reduce landlords’ revenues. Vacancy decontrol and the other changes in the rent laws enacted in the 1990s, he says, “are the only things that have breathed life into the real-estate market” in the city. The prospect of deregulation has encouraged more investment in rental housing, he adds.

Tenant groups call some of those investors “predatory equity.” These are highly leveraged private equity firms that bought huge swaths of rent-regulated housing. Their business plan depends on gaining enough vacancies to jack the rents up to market rates. One such firm is Vantage Properties, which bought 48 Queens buildings for $300 million last year, according to the Real Deal.

Vantage tenant Nancy Encarnación says the firm is deliberately allowing living conditions to deteriorate to drive her and her neighbors out. “We don’t demand luxury, just a decent place to live,” she adds.

Legal Services New York claims that Vantage Properties’ profit model runs afoul of the law, because the only way to achieve such a large tenant turnover is by dubious means. It filed a lawsuit last year to curtail the firm’s practices.

The Stewart-Cousins bill would also re-regulate apartments that were deregulated after 1997 if their rent is below $5,000 (or $3,500 in Nassau, Westchester, and Rockland counties). According to Tenants and Neighbors, more than 100,000 apartments in the city have been deregulated by vacancy decontrol or condo/coop conversions. About 1 million apartments remain regulated, about half of the city’s rental housing stock.

“We need nine more senators to pass this bill,” Stewart-Cousins said. So far, 22 Democrats and one Republican (Frank Padavan, Queens) have signed on as cosponsors. The 10 Democrats who have not endorsed it include Smith, Klein, Espada, Kruger and Johnson.

Bennett Baumer, a New York City-based housing organizer, contributed to this article.

HOW VACANCY DECONTROL WORKS

Former-Governor George Pataki, the Republican-controlled New York State Senate and a compliant Democratic-held state Assembly enacted vacancy decontrol in 1997 after heavy real-estate lobbying and campaign contributions. Thus began the slow phasing out of rent-regulated housing.

For a landlord to get an apartment deregulated, it must be vacated by the tenant — either voluntarily or through eviction. Once it is vacated, the landlord can automatically claim a 20 percent increase. For an apartment with $1,000 in monthly rent, this gives the landlord a $200 hike a month without even having to put a new coat of paint on the walls.

For larger increases, the key law is that a landlord can raise the monthly rent by one-fortieth the cost of any remodeling work done. To get the rent from $1,200 to the $2,000 deregulation threshold, the landlord needs to say she or he did $32,000 worth of work. That sounds like a lot, but often the landlord does some cosmetic work coupled with cheap materials to make an apartment look better.

In many cases, the landlord swindles the new tenants by overstating the costs of renovations, but it goes undetected. The state housing agency, the Department of Housing and Community Renewal (DHCR), only investigates the landlord’s claims that an apartment was legitimately deregulated if the new tenants make an overcharge complaint.

Tenants who move into a new apartment should obtain a “rent history” from the DHCR. This will show the last registered legal rent in the apartment. If you see big rent increases, you may want to file an overcharge complaint. Act quickly, because you only have four years to make a claim. If you win an overcharge complaint, the housing agency will reset your rent; if it finds “willful” overcharges, it can award triple damages.

Call the DHCR at 718-739-6400.

RENT REGULATION: A KEY TO AN AFFORDABLE CITY

Vacancy decontrol has contributed to skyrocketing rents, gentrification and increased tenant harassment, as there is an economic incentive to evict rent-stabilized tenants for higher-paying occupants. According to the Rent Guidelines Board, the median income of households in rent-stabilized units was $36,000 in 2007, and the median monthly rent of rent-stabilized units was $925. Along with limits on rent increases, rent-regulated tenants also have stronger protections against eviction, rights to renew their leases and the ability to pass on their apartments to immediate family members. Senior and disabled rent regulated tenants can also qualify for rent freezes. According to the New York State Tenants and Neighbors Information Service, almost 60 percent of rent-regulated tenants are people of color.

For market-rate tenants, it is a different story. The mean rent in Manhattan for a one-bedroom apartment with a doorman is $3,737 a month, according to The Real Estate Group. Marketrate tenants have no protections against giant rent hikes. They also do not have a right to a lease renewal, which discourages them from complaining about living conditions in their apartments.

Tenant groups say the long-term effect of vacancy decontrol will be to eliminate rent regulations in all but the city’s poorest neighborhoods. The RSA’s Jack Freund agrees — but he says that’s a good thing. Although almost all of the unregulated apartments built in the city have been luxury housing, he contends that the increase in the housing supply “ripples down through the system” and that if the market were freed up, owners would be in a position to provide housing to all levels of the market.

THE LANDLORD LOBBY

Along with real-estate concerns, individual landlords and deep-pocketed developers, the Rent Stabilization Association (RSA) and Real Estate Board of New York constitute the landlord lobby. Its power comes from their money, plain and simple. The landlords cut the campaign checks to politicians and expect legislation benefiting their interests.

Tenants, Housing Groups and Progressive Organizations

Tenants as a voting bloc have massive potential in New York politics. There are more than two million rent-stabilized tenants in the city and hundreds of thousands more in Mitchell-Lama, Section 8 buildings and public housing.

Housing Here and Now is the housing organizing arm of ACORN (Association of Community Organizations for Reform Now), a national group that organizes lowincome workers and people of color. Housing Here and Now is leading trips to Albany and holds rallies to strengthen the rent laws. (Contact them at 718-246-7900 ext. 247 to get involved.) The Real Rent Reform campaign is a coalition of housing groups and tenant associations that organize phone banks targeting rent-regulated constituents of state senators who have not yet endorsed repealing vacancy decontrol.

The union-backed Working Families Party (WFP) has the skills and resources to target rogue Democratic state senators who do not support repealing vacancy decontrol. The WFP’s Dan Levitan says it has no current plans to do so, but notes that Pedro Espada, Jr.’s district “is full of tenants” and that might persuade him to do the right thing. The WFP also supplied 50 organizers to propel Craig Johnson to victory in a special election in 2007.

ACORN has been concentrating on foreclosure assistance, but it also has the constituents and resources to reform the rent laws. It is influential in the WFP.

Two important tenant organizations are the city-based Metropolitan Council on Housing and the statewide Tenants And Neighbors.

THE HOME RULE QUESTION

The fact that the state legislature in Albany has power over New York City rent and eviction laws has long been a source of frustration for tenant groups and city elected officials. In 1971, the Urstadt law took home rule over rent laws away from New York City. It barred cities of more than one million people from enacting rent regulations stronger than the state’s.

Tenants argue that restoring home rule to New York City is good government, but landlords fear that the City Council would be more apt to enact pro-tenant legislation than state legislators who take campaign donations from the landlord lobby and have no rent-regulated tenants in their districts.

Although tenant groups, such as the Metropolitan Council on Housing, have long called home rule essential for preserving the city’s affordable housing, others may have conceded the issue. The Housing Here and Now coalition supports repealing Urstadt, says Executive Director Michelle O’Brien, but ending vacancy decontrol is its top priority.

“Some Democrats have made it pretty clear they’re against repeal of Urstadt,” said Dan Levitan, spokesperson with the Working Families Party.

One of them is Pedro Espada Jr.

NEW YORK STATE SENATORS

Jeff Klein: Klein is the numbertwo guy in the state Senate. He is known to prefer raising the vacancy-decontrol threshold to $3,000, instead of the current $2,000. He is rumored to be actively campaigning against the repeal of vacancy decontrol and triangulating on other progressive initiatives such as raising taxes on the rich — the top New York State income-tax bracket now starts at $40,000 a year.

Pedro Espada Jr.: Espada is the chair of the housing committee and has not taken a position on vacancy decontrol, although he is against restoring home rule to New York City. He told Daily News columnist Juan Gonzalez that he has an alternative plan to vacancy decontrol, but would not reveal it. Elected to the Senate last November, Espada previously held a seat in another Bronx district, but lost it in 2002 after he switched to the Republican Party. He is not respected by Senate Democrats, who resent his use of their small majority to extort personal power. Espada might also be indicted for campaign-finance violations later this year. As of press time, he did not have a district office in the Bronx.

Craig Johnson: Johnson won his Nassau County seat in a 2007 special election with strong support from the Working Families Party and tenant groups. He takes his cues from fellow-senator Jeff Klein and is also triangulating on tax reform and vacancy-decontrol repeal.

Carl Kruger: Kruger has a campaign war chest of $1.6 million, “much of it from city real-estate moguls who appreciate his support,” wrote Tom Robbins of The Village Voice in April 2008. Kruger ran unopposed last year and brokered a deal with Bruno to redraw his district in 2002 in exchange for supporting conservative issues. Fellow senate Democrats believed that he “spied” on for senate Republicans. According to the Daily News, Kruger also wants to take some surplus campaign cash to form a “Blue Dog” coalition of centerright Democrats in the senate.

Comments

Lou

02/28/2009 - 10:31pm

Be real. tenants cant have it rent laws any longer. Why should building owners lose money and their properties with below market rents in an economy where landlord expenses are going through the roof. Maybe if the city rolls back taxes, insurance company premiums and tenant claims are reduced, then the savings could be passed on to tenants. Food and clothing are not controlled nor should housing be under regulations. In addition, tenants who occupy rent stabilized apts. should show their need for being subsidized. i.e. Christine Quinn and Charlie Rangel occupy one or more rent regulated apts. They can afford other housing and should not be subsidized.

The whole myth about rent regulation is that "owners lose money." Built into rent regulation is a profit margin for landlords. If landlords who own rent regulated buildings can turn a profit, then they are bad business owners (who probably want bailed out). City taxes are also quite low compared to the suburbs and though landlords scream about taxes, they don't really have a complaint. Insurance premiums to high, join the friggin' club complainer. Food and clothing are also regulated (e.g. FDA). Bad arguments and this is why it is time to strengthen the rent laws. It's coming!

I'm so happy that these bills are moving forward, now it is up to us to let the Senate know how badly NYC tenants need relief. Low to Middle income tenants have been completely squeezed out of the equation by greedy landlords and developers, hopefully the economic crisis will be an impetus to restore some balance. And if the landlords don't want to own the building's anymore then sell it to us tenants and we'll run it ourselves.

You are right an efficient owner does not lose money - up till now - in a period of economic prosperity and high employment....but with that changing rapidly - taking the "profit margin" out that good owners have enjoyed is a recipe for deterioration and eventual abandonment of our cities housing stock. If owners can not make a profit, then why would they risk their money and sweat to maintain their buildings and provide services???? Maintaining a reasonable profit is the best protection for tenants seeking affordable and DECENT housing.

But that is the thing Dave, owners of rent stabilized housing already have a profit built into the laws! Buying rent regulated buildings is an assured profit! The reason many of these landlords are defaulting is because they paid too much for rent regulated buildings and are now getting burned. Regardless of whether or not vacancy decontrol is repealed, these private equity groups paid too damn much.

I also disagree that a "reasonable profit" is the best way to maintain decent housing. The way to maintain decent housing to enforce the building and maintenance codes (HPD) and to take over buildings where the landlord doesn't make repairs (HDFC coops).

Didn't it look good the day after the Election? NYS Senators who can hold us renters hostage aside, I want to point out a few things. People in Mitchell-Lama rentals got shafted by the legislators, who cynically kept saying "we'll save it" and let it die. (Whether or not they had a majority of Dems. in the Senate is beside the point.) Will we get home rule, is the point?

Rent stabilization for former Mitchell-Lama renters is "slow bleed". Many have been in apartments for a long time. No place to go.

Something I've observed, that was confirmed on a show not too long ago, by Vajra Kilgour, sitting in as host for Scott Sommer, on "Housing Notebook" on WBAI 99.5FM www.wbai.org:

Older women, living alone, who go to the hospital for minor or short term illness, who
have rent stabilized apartments, do not get sent home, but shipped from hospital to nursing
home. This makes their apartment "vacancy decontrolled", slight renovation and up to
market value. The tenant? Belongings dumped, person shut in nursing home, where they
are happy to have the social security checks. This can be fought via ADAPT, an activist group
fighting for legislation on keeping, getting folks out of nursing homes, incarceration, who don't need 24/7 nursing care. www.adapt.org

So long as legislators are more worried about losing campaign contributions than being "punished" by constituents not voting for incumbents....The good news is groups are organizing. The bad news is renting in NYC, particularly Manhattan is a mess.

And every time Columbia or NYU takes more real estate out of circulation and off the tax roles (because they are education, nonprofit), the less taxes for NYC. (Time for an article, please on how those universities are making profits.) Ironically, the captcha word is "trolley"...am old enough to have ridden in one in Brooklyn on my way to high school just before they disappeared....like low rents.

"The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.''
Paul Krugman, "Reckonings; A Rent Affair," June 7, 2000
[http://query.nytimes.com/gst/fullpage.html?res=9F02E4DF153FF934A35755C0A...

Reduces QUALITY AND QUANTITY is the key part. There's a housing shortage in New York and 60 or so years of rent control is partly to blame. It would be better to subsidize tenants. Section 8 vouchers usable anywhere would be best.

Landlords would just further fleece the government if it were Section 8 vouchers for all. The government would just be left with the bill for the higher rents. I think the above argument is dubious to say the least. For one it wholly ignores the role of government in building housing. One of the largest affordable housing programs is public housing and Section 8 together. Another is Mitchell-Lama housing. Furthermore, "K" doesn't even begin to address land scarcity in NYC or the fact that during large periods of NYC's history rent regulation gave landlords steady profits during unprecedented disinvestment from the City's urban core. Are we to blame rent regulation for this disinvestment? No. Rent regulation in fact gave slumlords steady profits. That the gov't gave massive tax breaks to suburban communities to build and land was cheap and there were profits to be made, not to mention racism.

The reason landlords and their apologists find rent regulation so disagreeable is that it works.

If we are going to look at the facts, and honor the truth, yes, we will have to blame rent regulation for the fact that there's reduced quantity and quality of housing in New York City. This is why Paul Krugman, who is not even close to being a free market apologist, writes that "rent control is among the best-understood issues in all of economics..."

Krugman also writes: "But people literally don't want to know. A few months ago, when a San Francisco official proposed a study of the city's housing crisis, there was a firestorm of opposition from tenant-advocacy groups. They argued that even to study the situation was a step on the road to ending rent control -- and they may well have been right, because studying the issue might lead to a recognition of the obvious."